Done Deal: Room for improvement in Tel Aviv

A new column: Real estate experts give their thoughts and opinions on local property deals around the country.

Tel Aviv apartment 311 (photo credit: Courtesy)
Tel Aviv apartment 311
(photo credit: Courtesy)
Avi Sasi is the CEO of Housing T.L.V Ltd.
Property details:
The three room apartment of 60 square meters, is on the 3rd floor in an old building with no elevator and no parking. It is in a bad condition, but has great potential for refurbishment.
The apartment is in a 50-year-old building that will eventually go through the TAMA 38 procedure. This means that the building is to be strengthened against earthquake damage, redesigned with a new lobby and staircase, an elevator will be installed, as well as other improvements. These upgrades will be made without the owners having to pay for it.
The apartment was sold by Housing TLV Ltd for NIS 1.5 million.
The apartment is located on Ocishkin St in Tel Aviv, right on the Yarkon River and has an open view to the sea and to the north of Tel Aviv.
The small, quiet street in the old north of Tel Aviv is just a two minute walk from the beach, Tel Aviv Port and is within walking distance from Dizengoff and Ben Yehuda Streets. Many potential buyers showed interest in the apartment due to its central location.
Business Analysis:
The apartment's price per sqm is NIS 25,000 while other apartments in this attractive area go for NIS 28,000 per sqm and more. An excellent deal in my point of view as it provides a safety net, should the buyers decide to sell and make a quick profit.
From the seller's point of view, he inherited the apartment, lives far away and can't handle the maintenance or collect the rent. For him this quick transaction was very comfortable. The seller agreed to reduce the price due to the fact that the buyer needs to spend money on remodeling the apartment.
On the other hand, should the new owners decide to rent it, they will receive a monthly rent of NIS 7,000 which works out at NIS 84,000 per year, representing an interest of more than 5.5 percent.
Bottom line:
The deal was closed within less than a week, and in my opinion the buyers got a great price for the apartment. If they were to remodel it they could resell for at least NIS 2,050,000, representing a profit of over NIS 500,000. Their quick decision helped them be the first to sign the contract from a long list of potential buyers.
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